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9/21/2010

I-15 CORE project grows economy

In a small press release from ksl.com, we read the story that the Utah government is creating more jobs with its investment in an I-15 CORE project. According to the article, this new project is creating more jobs than a typical project of this size usually creates as the government is being strategic in utilizing local businesses to purchase the building materials needed for the job.

I appreciate this endeavor as it appears that the Utah government is doing something similar to what the National government did during with time of the “Great Depression” with their Civilian Conservation Corps program.

I believe that this project will shift the “job supply” curve to the right while the “jobs demanded” curve will remain in the same location. As a result, the price of labor may fall some (making it harder for those already employed to make better wages); however, more people will have the opportunity to be employed and thus the overall market will improve with more employed workers.

3 comments:

Should the state of Utah have a purchase policy that is prejudiced based on location?

I think reasonable people can disagree about that one. But, I think both sides should recognize that a policy like this will probably lead to higher prices.

So the next question is whether the state of Utah should pursue a policy that is prejudiced, and likely to lead to higher prices?

A third question is whether the state of Utah should be allowed to shift net purchases within the U.S. without changing total purchases within the U.S.?

N.B. Buyers - like the state of Utah - have considerable legal freedom to discriminate any way they want. So, no doubt this is legal. But is it right? Also note that our legal system does not treat discrimination by sellers symmetrically with that of buyers.

@ Dave:Can't we argue that even though the CORE project is more directly benefiting Northern Utah, the increase in jobs and cash in the economy of Northern Utah will increase purchases and the income of those in that area which will thereby increase the tax revenue to the state, which will benefit Southern Utah as well? (or did I miss the point of your first question?)Also, I don't understand how this will lead to higher prices. Is that higher prices in the general economy?

I think this will benefit northern Utah at the expense of everywhere else. On net, that might help southern Utah since we're tied to northern Utah, but I can' be sure.

As to prices going up, if you were a vendor, and you knew the state was going to have a preferential buying plan, wouldn't you raise your prices (or lower your quality)? Governments claim that things don't work this way, but this is why economists measure things like elasticity.